Shipping 2023

Last Updated February 01, 2023


Law and Practice


Morais Leitão, Galvão Teles, Soares da Silva & Associados is a leading full-service international law firm, with a solid background and great experience. The shipping team provides a full range of legal services and has extensive international experience in advising on complex finance and leasing deals, security structures, ship sales, acquisitions and charter transactions, acting for a diverse range of clients worldwide. The International Ship Register in Madeira (MAR), a white-flag registry, is already established as an efficient and viable alternative to traditional ship registries, thereby attracting a number of international ship-owning groups and banks now looking to register their vessels in Madeira. Morais Leitão is one of the few Portuguese law firms with its own offices in Madeira capable of providing a full service to all those interested in the temporary and permanent flagging-in of vessels, mortgage registrations and the incorporation of ship-owning and management companies in Madeira.

The Civil Procedure Code, along with the Commercial Code, are two important sources of local law covering maritime and admiralty issues.

Law No 35/86, of 4 September 1986, was originally intended to create five maritime courts in Portugal. However, only one was created and is currently operational in Lisbon. The Lisbon Maritime Court is the court of first instance and the Supreme Court hears appeals.

Law No 62/2013, of 26 August 2013, which describes the organisation of the judiciary system, provides the authorities for which the maritime court is competent, which encompass all the claims related to maritime law. These include shipping matters, given that the Portuguese jurisdiction does not have a specific shipping court. In practice, the most common maritime and shipping claims filed with the maritime court are related to disputes concerning cargo and passenger claims.

The General-Directorate for Natural Resources, Security and Maritime Services (DGRM) is the entity responsible for exercising port state control over all foreign vessels calling in and sailing within Portuguese waters and for ensuring that they meet and comply with the international safety, security and environmental standards, and that their crews have adequate living conditions and proper working conditions. Where irregularities are identified during inspections, the DGRM may apply fines and detain the vessel until these irregularities are cured.

The main domestic applicable statute regarding port state control is Decree-Law No 61/2012, of 14 March 2012, as amended, which transposes Directive No 2009/16/CE, of the European Parliament and of the Council of 23 April 2009, into the Portuguese jurisdiction. This statute provides the framework applicable to inspections that may be conducted by the port State to ensure compliance with the applicable international requirements.

Portugal is a signatory of the United Nations Convention on the Law of the Sea (UNCLOS) and a party to the Paris memorandum of understanding on port state control (Paris MoU).

Decree-Law No 43/2002, of 2 March 2002, created the National Maritime Authority (Autoridade Marítima Nacional, NMA), which is the competent authority in all matters related to the maritime sector in the country. The NMA is responsible for the safety and control of navigation, protection of the environment and the fight against pollution, and protection of human life in maritime activities and rescue operations, among others. Decree-Law No 265/72, of 31 July 1972, provides the framework applicable to port authorities. This statute includes the main attributions of these entities, emphasising their competence to ensure compliance with rules relating to safety and pollution. These powers are, in practice, exercised by the captains of the ports, who are competent to impose penalties and other measures in consequence of the violation of the statutes referred to previously and to instruct the competent proceedings, in accordance with Decree-Laws No 44/2002 and No 45/2002, both of 2 March 2002, as amended. These penalties may include, among others, the arrest of the vessel, the suspension of its operations, and the imposition of fines.

In the Portuguese judicial system, a vessel is considered to be a movable asset subject to registration.

All types of merchant vessels can be found under the Portuguese flag: product and chemical carriers, bulk carriers, container vessels, gas tankers, cruise ships, crude oil, etc (except that the MAR does not permit the registration of fishing vessels). To fly the Portuguese flag, a merchant vessel must be registered either with the Conventional Ship Registry or the International Shipping Registry of Madeira (MAR). The Conventional Registry requires registration with both the Harbour Master and the Commercial Registry, whereas registration with the MAR is by way of registration with its Technical Commission as well as the Commercial Registry.

The conventional registration is regulated by Decree-Law No 43/2018, of 18 June 2018, which created the National System of Vessels and Seafarers (Sistema Nacional de Embarcações e Marítimos), and Decree-Law No 92/2018, of 13 November 2018, which established a simplified regime for conventional ship registration. This registration is made through an application submitted to the Electronic Counter of the Sea (Balcão Electrónico do Mar), a virtual desk responsible for receiving requests and instructing the procedures related to the registration of vessels and seafarers.

The international ship registry of Madeira is regulated by Decree-Law No 96/89, of 28 March 1989, as amended (the “MAR Regulation”). The entity responsible for this registration is the MAR, which is a branch of the Commercial Registry Office of the free trade zone of Madeira.

No nationality requirements are applicable to the ownership of vessels in Portugal. In accordance with Article 6 of Decree-Law No 92/2018, of 13 November 2018, the registration of ships is mandatory, regardless of the nationality of a ship’s owner.

The law allows the provisional registration of vessels and mortgages (and other similar encumbrances) over hulls/vessels under construction, as per Article 21.7 of the aforementioned statute.

For ship-owners to register their vessels in MAR, they must appoint a local agent with all the necessary powers to ensure their full representation before the State authorities, the regional authorities and third parties and who must be duly licensed to undertake maritime transport sector or recreational vessel activities in the Madeira Autonomous Region, in accordance with Article 8 and those following of the MAR Regulation.

Article 16 of Decree-Law No 92/2018, of 13 November 2018, provides that bareboat-chartered vessels may be temporarily registered in the conventional registry. The temporary registration does not grant the applicant ownership of the vessel, and the request must be accompanied by the relevant bareboat-charter agreement, the consent of the owner of the vessel, and an authorisation of the entity with which the vessel is registered.

Article 15 of the MAR Regulation provides that bareboat-chartered vessels may be temporarily registered in the MAR, as long as this is duly authorised by the ship-owner, the entity with which the vessel is permanently registered, and by the mortgagee(s), if any.

Dual registrations are allowed only through the temporary registration mechanism.

With regard to the conventional registration, the registration of mortgages is maintained by the National System of Vessels and Seafarers and obtained from the virtual desk referred to in 1.3 Domestic Legislation Applicable to Ship Registration. In order to register a mortgage over a vessel, a document constituting or amending the mortgage with a recognised signature of the owner must be submitted, as per Article 21.3 of Decree-Law No 92/2018, of 13 November 2018.

The MAR maintains the registration of mortgages, which must be created in writing, signed by the title-holder, with the seller’s signature authenticated, reference being made to the powers and capacity to undertake the act, whenever applicable, pursuant to Article 14 of the MAR Regulation.

Ownership of the vessel and mortgages must also be registered on the Commercial Registry.

The ship-ownership and mortgages registry is not available to the public in Portugal. Only parties interested in the registration may request disclosure of this information. The law does not define what an “interest” in the registration means.

The MAR’s records are not public. However, the MAR Regulation does not specifically address this matter. Nonetheless, its latest amendment introduced a greater digitalisation of the procedures and records. The full practical effects of these changes have still to be assessed.

Nevertheless, Article 5 of Decree-Law 43/2018 provides that the details of ship ownership in the National Maritime and Ship System (SNEM) are only accessible to some entities, namely, those that intervene in the procedures covered by the system, as well as the bodies of the NMA and other supervisory and enforcement agents.

The international conventions that may impact upon the liability of owners and interested parties in events of pollution and wreck removal are the following:

  • the Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages, Brussels, 10 April 1926;
  • the Convention upon the Limitation of the Liability of Owners of Sea-Going Ships, Brussels, 10 October 1957; and
  • the Nairobi International Convention on the Removal of Wrecks (WRC) of 2007.

As a Member of the European Union, Portugal is also subject to the European maritime legislation in force.

Decree-Law No 202/98, of 10 July 1998, provides that the owner, unless proven otherwise, is liable for any damage caused as a consequence of an action or omission of any of the people working on board the vessel.

The following international conventions have been ratified by Portugal:

  • the Collision Convention 1910;
  • the Collision Convention 1952;
  • the Criminal Collision Convention 1952; and
  • the COLREGs.

Portugal also ratified the Convention on the International Regulations for Preventing Collisions at Sea, dated 20 October 1972, on 17 October 1978.

Portugal is also subject to the International Convention on Maritime Search and Rescue, signed in Hamburg on 27 April 1979.

Regarding domestic law, the key statute that may have an impact on the liability of owners and interested parties in event salvage is Decree-Law No 15/94, of 22 January 1994, which created the National Maritime Research and Rescue System (Sistema Nacional para a Busca e Salvamento Marítimo). There is no specific domestic legislation regarding collision.

Under the Collision Convention 1952, a claim for collision may be brought before the Portuguese courts in the following circumstances:

  • Portugal is the only country where the defendant has its habitual domicile or place of business;
  • Portugal is the country where arrest of the defendant’s vessel has been effected or of any vessel belonging to the defendant which can be lawfully arrested or where arrest could have been effected and security has been provided; or
  • the collision occurred within the limits of a Portuguese port or within its inland waters.

When there is a collision between a vessel sailing the Portuguese flag and another vessel sailing under the flag of a non-contracting state to any of the aforementioned conventions and regulations, reference should be made to the Civil Procedure Code, which provides that the claimant must commence an action before the court of the place where:

  • the collision occurred (provided it was in Portuguese territorial waters);
  • the defendant is domiciled;
  • the vessel took refuge; or
  • the vessel called for the first time after the collision.

Portugal is not a signatory of the Nairobi WRC 2007. The removal of wrecks is therefore dealt with under Decree-Law No 64/2005 of 15 March 2005, which lists the entities that hold powers to order the removal of the wreck and the obligations to the owners in respect thereof.

Decree No 18/2017, of 16 June 2017, includes the 1976 Convention on Limitation of Liability for Maritime Claims in the Portuguese jurisdiction.

Further, Portugal is a party to both the 1924 International Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Sea-Going Vessels and the 1957 International Convention relating to the Limitation of the Liability of Owners of Sea-Going Vessels and its 1979 Protocol (the “1957 Convention”). The limitations arising from the Hague Rules and those provided in Decree-Law 352/86 of 21 October 1986 (as amended), which transposed into Portuguese law certain provisions contained in the Visby Protocol, should also be noted.

Reference should also be made to Article 12 of Decree-Law 202/98, which provides that, in addition to the limitation of liability provisions included in international conventions ratified by Portugal, the owner can limit its liability to the vessel and to the freight at risk by abandoning the vessel to its creditors and establishing a limitation of liability fund.

Decree No 49029, of 26 May 1969, provides the procedure and requirements for establishing a limitation fund.

The owner of the ship and the entities referred to in Article 6 of the Convention upon the Limitation of the Liability of Owners of Sea-Going Ships (Brussels, 10 October 1957) may request from the competent court that the limitation fund be created. The request must be accompanied by the following information:

  • the fact from which damages arose;
  • the amount of the limitation fund, calculated in accordance with Article 3 of the aforementioned Convention;
  • the way in which the fund is to be created; and
  • if applicable, the amount to reserve pursuant to Articles 3 and 4 of the Convention.

The request must be accompanied by the following documents:

  • a list of the known creditors entitled to participate in the fund, including a reference to their residence/headquarters and amount of credit; and
  • elements to justify the calculation of the amount of the limitation fund.

As a way of limiting liability, a vessel’s owner may abandon the vessel to its creditor(s) through the constitution of a limited liability fund.

The creditors are entitled to apply for the judicial sale of the vessel in order to be paid out of the sales proceeds. The judicial sale in this case is undertaken under the rules which apply to anticipated sales in enforcement proceedings. After the sale is made, the next steps will be governed by the rules applying to sales in enforcement proceedings.

The enforcement rules will also be applied with the necessary adaptations to any judicial sale which may occur within the scope of the incorporation of a limited liability fund provided for by one of the many international conventions on limitation of liability.

The Hague Rules, created by the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, are applicable in Portugal. The Hague Rules apply mandatorily where the bill of lading was issued in the territory of a contracting state.

Although Portugal has signed the International United Nations Convention on the Carriage of Goods by Sea, 1978 (the “Hamburg Rules”), this instrument was not ratified and, therefore, these rules have not entered into force in this jurisdiction.

Decree-Law No 352/86, of 21 October 1986 (as amended), updated the applicable framework, but makes an express reference to the international conventions to which Portugal is subject.

Although Portugal has not signed or ratified the Visby Protocol, some of its provisions (in particular, those relating to package and unit calculations) were transposed into domestic law by Decree-Law 352/86. Decree-Law No 352/86 applies on a subsidiary basis to the Hague Rules, also covering a number of issues that fall outside the scope of these Rules: for example, the pre-loading and post-discharge responsibilities and liabilities, calculation of package and units’ limitation. Decree-Law No 352/86 has also transposed into Portuguese law the limitation period of two years arising from the Hamburg Rules.

In general, any party to a contract of carriage that holds an interest over the cargo and is able to show that it has suffered loss or damage arising from the carrier’s actions or omissions is entitled to bring a claim. Accordingly, the title to sue on a bill of lading includes the rightful holder of the bill of lading. It should be further noted that in respect of:

  • a simple bill of lading, the right to bring a claim remains with the named consignee;
  • an order bill of lading, only the latest endorsee can sue; and
  • a bill of lading to bearer, this means that the rightful holder at any given moment may sue.

Further, and subject to certain requirements, rights under a bill of lading may also be validly assigned to third parties or subrogated (for example, when insurers indemnify cargo interests and then seek reimbursement from the carrier).

Decree-Law No 202/98, of 10 July 1998, equates the liability of the carrier to that of the ship-owner. If third parties file claims against a ship-owner which is not the carrier, that ship-owner may not argue against the claimants that it is not the carrier, but may require a reimbursement from the carrier, pursuant to Article 6 of the aforementioned statute. The ship-owner may limit its liability through the creation of a limitation fund.

A carrier may establish a claim against the shipper for misdeclaration of cargo under Article 4.2 of Decree-Law No 352/86, of 21 October 1986. It should be noted that, under Portuguese law, court decisions are not binding but persuasive, ie, unlike common-law jurisdictions, where case law is binding.

Article 27.2 of Decree-Law No 352/86, of 21 October 1986, provides that the claims arising from damage to cargo must be filed within two years, counted from the claimant knowing of the damage. The law provides no scenario in which this timeframe may be extended or sustained.

Portugal is subject to the Convention Relating to the Arrest of Sea-Going Ships, signed in Brussels on 10 May 1952. These matters are further regulated by Decree-Law No 201/98, of 10 July 1998, which provides the legal definition of vessel and the Civil Procedure Code, approved by Law No 41/2013, of 26 June 2013, which provides the requirements applicable to the arrest and the corresponding procedure.

Portugal acceded in 1931 to the Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages, Brussels, 10 April 1926. However, in 2010 Portugal revoked its accession to this Convention with effect from 2012. The domestic Portuguese rules on the priority of maritime claims are contained in Articles 574–583 of the Commercial Code (section I – Maritime Liens, of Chapter VIII – Maritime Liens and Mortgages).

This framework divides maritime liens in relation to the type of asset in question.

Thus, there are three types of maritime liens, each one having a list which establishes their ranking:

  • liens on the vessel;
  • liens on the unpaid freight; and
  • liens on the cargo.

The liens included in these lists take priority over maritime claims.

The recognised list of liens against a vessel are the following:

  • judicial costs and expenses borne in the common interest of the creditors;
  • salvage and assistance salaries;
  • mortgages and pledges over the vessel;
  • expenses in respect of pilotage and towage in entering the port;
  • port taxes, including (but not limited to) tonnage, lighthouse, anchorage and public health;
  • expenses for the custody of the vessel and the storage of her equipment;
  • Master and crew salaries;
  • vessel’s repair costs (including her equipment);
  • reimbursement of the cargo which the Master needed to sell;
  • insurance premiums;
  • any part of the outstanding purchase price in debt since the last acquisition of the vessel;
  • expenses relating to vessel repairs (including her equipment) in the three years prior to the voyage and counting from the date the repair was concluded;
  • debts arising from the vessel’s construction contracts;
  • insurance premiums covering the vessel, if she was all insured, or over part of the vessel’s accessories that are not included in the tenth point above; and
  • compensation due to the shippers for lack of delivery or of damage to the cargo.

It should be noted, however, that the wording of Article 578 of the Commercial Code suggests that the liens set out in the first ten points above, with the exception of the third point, are only those incurred during and for the purposes of carrying out the vessel’s last voyage.

The aforementioned liens may be actioned against the vessel; all other claims are maritime claims and require the establishment of a debt/pecuniary amount due.

If the owner is liable (even if only partially) in personam, any vessel it owns may be arrested. However, an arrest may be obtained over a specific vessel for maritime liens, regardless of its owner’s personal liability.

A bunker supplier could obtain the arrest of a vessel in connection to unpaid bunkers supplied to that vessel. The type of claim has no impact on the possibility of the vessel being arrested. Only the amount owed is relevant.

The arrest is an injunction procedure aimed at ensuring that the debtor does not dissipate the means to pay its debts. Therefore, it is a temporary solution. Under Portuguese law, only the courts have the capacity to determine that a vessel be arrested. The interested party in the arrest must present the facts that demonstrate the existence of the claim and that justify their fear that any such credit will not be satisfied. The arrest is first ordered on a provisional basis without a hearing. However, an inter partes hearing will be held before the final arrest order is made. A power of attorney and evidence will be required (simple copies and not originals). Important documents should be translated, but can be presented subsequently. The arresting party is not required to provide security.

It is possible to arrest bunkers and freight. Article 580 of the Portuguese Commercial Code provides the following maritime liens over cargo:

  • legal costs incurred in the common interests of all claimants to preserve the cargo;
  • salvage;
  • official charges levied at the port of discharge;
  • debts in respect of carriage, demurrage and discharge;
  • warehousing charges;
  • general average contributions; and
  • insurance premiums.

This statute further provides a list of maritime liens over freight, which are the following:

  • legal costs incurred to protect the common interests of all claimants;
  • crew wages;
  • general average;
  • insurance premiums; and
  • damages due to shippers.

In a case where the owner of a ship is personally liable for the claim upon which the request for the arrest is based, any ship which that debtor owns may be arrested. If this is not the case, a maritime lien over a vessel may not be enforced through the arrest of another vessel.

Under Portuguese law, there are no other forms of attachment other than the arrest.

The only exception is the newly introduced amendment to the MAR Regulation, which provides that, in the event that the parties have expressly included this mechanism in the mortgage created over the vessel, the mortgagee may, in a case of default, take possession of the vessel without the need to resort to a judicial court. This mechanism grants the mortgagee the powers to seize, navigate and sell the vessel, in accordance with the terms provided in the agreement, in accordance with Article 14-I of the MAR Regulation.

The arrested vessel may be released in the following cases:

  • if the underlying debt is settled;
  • if the debtor provides adequate security (which is usually a bank guarantee);
  • if, in the event that the Portuguese courts are competent to decide on the main claim, that claim is not filed by the creditor which obtained the arrest within 30 days of the arrest being ordered by the court.

The Portuguese legal system contains no specific legislation governing the judicial sale of vessels, which is governed essentially by the Civil Procedure Code and the Commercial Code.

A judicial sale is possible only where certain specific mechanisms are put in place and it may take place in the following circumstances:

  • at the conclusion of enforcement proceedings in which the vessel has been arrested;
  • during the course of insolvency proceedings relating to her owner where it has been determined that these proceedings will result in the liquidation of assets;
  • in the case of irreparable unseaworthiness where the Master applies for her sale without the consent of the owner; and
  • as the result of an act of abandonment by the owner, resulting in the incorporation of a limitation of liability fund for the creditors.

The court may, however, exceptionally order an advance sale prior to that if it considers that the asset is subject to deterioration and depreciation.

The anticipated sale may be requested by the enforcement agent, the applicant for the enforcement, the defendant (vessel’s owner) or any other registered creditor. The court will first hear all the interested parties and will decide afterwards, unless urgency is alleged, in which case the court will make a decision immediately.

However, it should be noted that, in practice, vessels are not usually sold during the course of the arrest procedure. A vessel is sold only after all claims against it are determined and a final judgment handed down, following the recognition and ranking of all claims. The judicial sale of arrested ships may take place through one of the following methods:

  • sale after tender by sealed bids;
  • sale by regulated capital markets;
  • direct sale to a person or persons who have a right to acquire the asset;
  • sale after a private negotiation;
  • sale after an auction made by an auction establishment;
  • sale made by public storage facility; or
  • sale after electronic auction.

The decision on which of the methods is adopted is made by the execution agent (agente de execução) after consulting with the claimant, the debtor and any secured creditors.

The port acts, in the case of the arrest of a vessel, as a de facto custodian for the vessel. The costs of maintaining the vessel are usually paid out of the proceeds of sale. Unless a special authorisation is given for the vessel to sail, the legal custody and maintenance of the vessel are the responsibility of the appointed judicial trustee, who has the powers to take all the decisions and to enter into all contracts deemed necessary, at their discretion, to assure the custody and maintenance of the vessel.

The ranking of the claims follows the order of the list referred to in 4.2 Maritime Liens. Mortgages are ranked third in this list.

There is no direct equivalent of Chapter 11; however, under Portuguese law, insolvency proceedings may be replaced or preceded by a reorganisation of the corporate entity in an effort towards keeping the company functioning in order to pay its debts. This is not, however, a decision of the court, but rather of the corporate entity itself or of its creditors. A Portuguese court can order the arrest and sale of a vessel owned by owners under Chapter 11, but may stay the action if formal evidence of the Chapter 11 proceedings is produced and recognised by the Portuguese court.

If a vessel’s owner is declared insolvent, the vessel may be sold during the course of the insolvency proceedings if a decision is taken in these proceedings that the insolvent estate should be liquidated. The sale is undertaken by the insolvency administrator, who is required to notify all lien holders of the method they propose for the sale. The lien-holders may, within one week from receiving this notification, make a proposal for the purchase of the vessel, either directly or through a third-party buyer. Any such proposal must include a cheque to the order of the insolvency estate in an amount equal to 20% of the offer. The insolvency administrator is allowed to reject this proposal and to pursue the sale through another method, but if this subsequent sale is concluded at a lower price, the insolvency administrator is liable for the difference.

If a defendant demonstrates that an arrest was wrongfully procured by the claimant, it may ask the court to hold the claimant liable for damages pursuant to Articles 542 and following of the Portuguese Civil Procedure Code. Actions of this kind are not common.

Portugal ratified the 2002 Protocol to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, dated 13 December 1974. The time limit for filing any such claims is two years. The limitations on liabilities available to the owners in respect of passengers’ claims are those provided under Articles 7 and 8 of the aforementioned convention.

Regulation (EC) No 392/2009 of the European Parliament and of the Council of 23 April 2009 on the liability of carriers of passengers by sea in the event of accidents also applies.

Portuguese courts recognise and enforce law and jurisdiction clauses stated in bills of lading, unless these are expressly aimed at excluding Portuguese jurisdiction, in accordance with Article 7 of Decree-Law No 35/86, of 4 September 1986.

See 6.1 Enforcement of Law and Jurisdiction Clauses Stated in Bills of Lading.

Portugal has ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which has been in force since 16 January 1995. The Civil Procedure Code provides the procedure of confirmation of foreign decisions.

Enforcement proceedings of both foreign judgments and foreign arbitral awards are subject to advance exequatur proceedings in Portugal, the first under Brussels I and the second under the New York Convention.

As previously referred to, an arrest is always obtained as an ancillary claim vis-à-vis a “main claim”. Portuguese courts may order the arrest of vessels in Portuguese waters, regardless of whether they are competent regarding any such main action.

The primary domestic source of law for arbitration in Portugal is Law No 63/2011, of 14 December 2011 (the “Voluntary Arbitration Law”). This is based on the UNCITRAL Model Law, adapted to the Portuguese legal system and practice.

There is a specialist maritime arbitration, conciliation and conflict mediation centre called CONCÒRDIA, with its own Rules of Arbitration and list of Arbitrators/Experts.

If proceedings are commenced in breach of a foreign jurisdiction or arbitration clause, the defendant must be acquitted and the proceedings terminated.

Owners of vessels registered in Madeira enjoy, under Decree-Law No 92/2018, of 13 November 2018, an exemption from income tax and a partial exemption from social security contributions in respect of qualifying crew members.

Tonnage tax was introduced in Portugal in 2018. Only a corporate income taxpayer with a head office or place of effective management in Portugal who is engaged in shipping activities may opt to benefit from this regime.

Measures were adopted by the Portuguese government regarding cruise ships calling at ports in Portugal.

These measures determined a ban on the landing and shore leave of passengers and crew of cruise ships in national ports, due to the worldwide epidemiological situation, the increase in cases of infection in Portugal along with the gradual extension of its geographical reach, the need to contain the possible lines of contagion, and the high risk arising from the disembarkation of cruise ship passengers and crew.

These measures have since been revoked and no further specific restrictions or measures have been adopted regarding maritime activities in Portugal.

No specific measures were taken regarding commercial loading and discharging operations.

The concept of force majeure is not specifically adopted under Portuguese Law. However, parties to a contract may freely negotiate and agree to a force majeure clause in their contracts, and this is highly recommended.

In the absence of an express contractual force majeure clause, Portuguese law does, however, include norms relating to unexpected changes in circumstances, a concept which is akin to force majeure and would, in principle, be applicable to the consequences of the pandemic, as it would to any unexpected and unavoidable event. In general terms, this concept provides that a contract may be modified or terminated when the circumstances on which the parties based their decision to enter into the agreement have suffered an abnormal and unforeseeable alteration, as long as requiring the performance of the obligations assumed by the parties gravely affects the principles of good faith and are not covered by the own risks of the contract. There are limits to this concept.

Currently, there are no known Portuguese court decisions determining COVID-19 as a force majeure event. However, some court decisions do refer to COVID-19 as a change in circumstances, which may excuse the debtor from complying with its obligations under the contract. This is, however, not common, as the requirements for a change of circumstances are not easy to meet.

Decree-Law No 106/2021, of 3 December 2021, introduces amendments to Decree-Law No 281/2000, of 10 November 2000, which sets out the limits on the sulphur content of certain types of petroleum-derived liquid fuels to reduce the harmful effects of such emissions on people and the environment, transposing into national law Directive 1999/32/EC relating to a reduction in the sulphur content of certain liquid fuels.

As an EU member state, Portugal is also subject to the following EU maritime legislation relating to the sulphur-content limitation (amongst others):

  • Commission Implementing Decision (EU) 2015/253, which lays down the rules for sampling and reporting under Directive 1999/32/EC on the sulphur content of marine fuels; and
  • Directive (EU) 2016/802 of the European Parliament and of the Council, of 11 May 2016, relating to a reduction in the sulphur content of certain liquid fuels.

In the Portuguese territorial sea, exclusive economic zone and pollution control zones, marine fuels may not be used if their sulphur content exceeds  0.50% mass by mass (m/m) as of 1 January 2020, while, at national ports, vessels may not use marine fuels with a sulphur content exceeding 0.10% m/m.

The DGRM, the National Entity for the Energy Sector (entidade pública empresarial E.P.E.) (ENSE) and the NMA are the responsible bodies for the surveillance and enforcement of the sulphur content limitations. If the sulphur limitations are not respected, monetary sanctions may be applicable.

There are no known enforcement actions related to sulphur-content limitations, nor any known proceedings/sanctions arising from the violation of any such limitations.

The Portuguese jurisdiction has not adopted any specific international trade sanctions as part of its domestic law, but Law No 97/2017, of 23 August 2017, provides the framework applicable to the application and enforcement of restrictive measures approved by the UN or the EU, as well as the corresponding procedures. In light of this statute, it is assumed that the Portuguese jurisdiction will co-operate with the above-mentioned entities in the enforcement of any international trade sanctions applicable to Portugal or Portuguese entities.

There is no public information on entities in the Portuguese jurisdiction having been subject to any trade sanctions, or in relation to any legal proceedings having been conducted in this regard.

Vessels registered in Madeira may be owned and managed by foreign incorporated companies and have full access to EU cabotage.

Recent changes made to the MAR Regulation provide ship-owners with self-remedies which make this registry very dynamic, safe and, therefore, appealing.

Morais Leitão, Galvão Teles, Soares da Silva & Associados

Rua Castilho, 165

+351 213 817 400

+351 213 817 499
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CF – Maritime Legal Services is a law firm based in Madeira, Portugal that provides high-standard shipping and maritime legal services. CF – Maritime Legal Services is the only law firm in Madeira exclusively dedicated to the provision of legal services related to shipping and maritime law, with a particular focus on matters linked to the Madeira Ship Register and to the Madeira international Business Centre (MIBC). The firm provides legal assistance in the registration of ships, in matters related to ship finance and in the licensing and incorporation of companies within the scope of the MIBC, as well as in other shipping-related services. Aware of the specificities and challenges of the maritime and ship finance industries, CF – Maritime Legal Services provides high-quality, client-oriented services, with the accuracy and knowledge that follows from years of experience.


Portugal is consistently growing as a reliable and modern flag state. The number of vessels flying the Portuguese flag continues to grow every year and the outlook is that this trend will remain. Through the International Shipping Register of Madeira (MAR), Portugal reached a prominent place within the shipping industry at a worldwide level. As a European flag state, Portugal offers confidence and consistency, while embracing a competitive operational regime.

Furthermore, through the Madeira International Business Centre (MIBC), Portugal offers a set of tax advantages that, when combined with those of MAR, embody a very attractive framework for ship-owners who wish to conduct business based in Europe.

The synergy between a high standard flag state and a business-friendly environment seems to be the key factor for the success of Portugal in shipping, with Madeira playing an important role. Madeira is one of two autonomous regions of Portugal and is an outermost region of the European Union (EU). The creation of the MIBC in 1980 and of the MAR in 1989, under the umbrella of the EU, represented important tools towards the development and diversification of the Madeira (emerging) economy.

With the main goal of attracting foreign investment, the MIBC and the MAR soon contributed to energise the regional economy and revitalise industries that were somehow dormant. The shipping industry, that once was paramount in Portugal, was almost non-existent at the time the MIBC and the MAR were created. Both these regimes underwent various and substantial improvements over the years aimed at implementing international and European standards and reforming concepts and procedures.

In compliance with European regimes, the MIBC and the MAR demand transparency, substance and commitment. Although the MIBC allows for the incorporation (and operation) of companies in industry sectors other than shipping, the regime fits particularly well the shipping industry.

The MIBC Regime

As the major tax advantage, the MIBC regime allows companies to benefit from a corporate income tax of 5%. The access to this reduced rate requires companies to meet specific criteria. Indeed, companies are required to meet one of the following substance requirements:

  • hire one to five local employees in the first six months of activity and make an investment of, at least, EUR 75,000 in tangible or intangible fixed assets in the first two years of activity; or
  • hire six or more local employees in the first six months of activity.

The 5% corporate income tax rate is limited up to ceilings placed upon the annual taxable income, depending on the number of local employees created by the company, as follows:

  • 1 to 2 employees: EUR2,730,000
  • 3 to 5 employees: EUR3,550,000
  • 6 to 30 employees: EUR21,870,000
  • 31 to 50 employees: EUR35,540,000
  • 51 to 100 employees: EUR54,680,000
  • more than 100 employees: EUR205,500,000.

Higher benefits will be awarded to companies with higher involvement with local communities.

The creation of local employment is the result of the policies of a regime designed at boosting the local economy. The underlying idea is to encourage local employment by creating wealth and minimising the risk of migration of young people.

Today, the law expressly states that the number of employees is determined by reference to the number of people earning income from related employment (ie, under an employment contract), paid by the company, provided that they are (i) tax residents in Madeira or (ii) employees or seafarers on board vessels or recreational yachts registered with the MAR. The law also establishes that part-time or intermittent employees are considered proportionally to the full-time employees in a comparable situation, measured in number of annual work units.

From a shipping company perspective – owning vessels registered with the MAR and employing seafarers directly – the compliance of the above-mentioned criteria is inherent to the regular activity of the company. Moreover, as part of the set of advantages linked to the MIBC and the MAR regimes, special tax advantages are granted to the seafarers in terms of personal income tax (IRS) and social security.

The MIBC regime provides for a full exemption of IRS in what concerns wages received by seafarers on board vessels registered with the MAR. On the other hand, the MAR regime provides for a particular social security regime, according to which:

  • Portuguese seafarers or seafarers residing in Portuguese territory must be (mandatorily) covered by the general social security system for employed workers, being the contribution rate of 2.7% (2% to be paid by the employer and 0.7% by the employee); and
  • foreign/non-resident seafarers may be covered by any social security scheme (either in Portugal or abroad).

Considering this legal framework, Madeira presents itself as a competitive jurisdiction for shipping-related business, offering a comprehensive set of tax incentives.

As a generic background requirement, access to tax incentives depends on the creation of an effective and consistent (physical and human) structure in Madeira. Although the need for substance is intrinsic and traditionally associated with the regular development of any business activity, the MIBC regime expressly requires companies to develop their activity in and from Madeira, through a dedicated and proper structure established in the Region.

As such, only gains and income arising from the activity developed in Madeira, through an appropriate structure, can benefit from the reduced corporate income tax rate. From a shipping company perspective, this means, regardless of the number of (eligible) employees on board on vessels registered with the MAR, the company must establish a proper structure in Madeira, from which business is conducted.

Finally, as ancillary tax benefits (but no less important in the context of an operational shipping company), the MIBC regime comprises the following main benefits:

  • exemption from withholding tax on dividends and interest paid to non-resident shareholders – either individuals or corporations (exception made to entities resident in low tax jurisdictions); and
  • exemption from withholding tax on interest paid to non-resident lenders, provided that the loans are intended for the normal functioning of the company.

For entitlement to the above tax benefits, proof of the non-resident status of the above-mentioned entities (shareholders and lenders) must be provided to the tax authorities, if and when requested.

The MAR Regime

In spite of the advantages linked to the incorporation of a company within the MIBC seeming clear, registration of a vessel with the MAR does not require incorporating a company within the MIBC. Any non-resident entity can register an (eligible) vessel with the MAR, provided that (i) it appoints a local representative to ensure full representation before the state authorities, the regional authorities and third parties, and (ii) it chooses a special private domicile for these purposes.

The MAR regime defines vessel as any commercial or recreational vessel operating at sea, including fixed or floating platforms, auxiliary boats and towing vessels. As such, excluding fishing vessels, all types of vessels are, by law, eligible for registration. However, when assessing eligibility, the Technical Commission of the MAR – a body forming part of the maritime administration responsible for the fleet registered with the MAR – takes into consideration certain criteria, namely: the vessel’s age, the Port State Control performance, and the performance of the International Safety Management Company.

Documents and procedures underlying the registration of a vessel with the MAR are in line with those internationally practised. Considering that, in most cases, the documents submitted for registration with the MAR are produced abroad, they must comply with certain formal requirements, such as notarisation and legalisation.

MAR accepts provisional registration based on copies of the relevant documents. Provisional registration is valid for a period of 90 days, during which time the ship-owner must submit with MAR the original documents to accomplish permanent registration. MAR also allows for bareboat charter in and bareboat charter out registration.

Proof of registration is provided by means of an Ownership Registration Certificate in e-format. MAR is a paperless Ship Register based on a swift, efficient and cost-effective system, where e-certificates are provided as a standard approach. Hard copies of some certificates may be available upon request, if needed for specific routes or port calls.

As part of the tax incentives linked to the MAR, no registration fees are due upon registering a vessel or other facts subject to commercial registration, namely mortgages. Likewise, no notarial fees apply provided that deeds are executed at the MAR’s dedicated Notary’s Office. Fees are, however, due to the Regulator of the MAR – the Sociedade de Desenvolvimento da Madeira S.A. (SDM) – calculated according to the net tonnage of the vessels.

MAR is a 24/7 service register, permanently available for any matters concerning: (i) maritime emergencies, (ii) seafarers matters and (iii) registration of vessels, mortgages and other liens.

Crew Requirements

The MIBC section above addressed the role of seafarers in the context of the employment requirement imposed under the MIBC regime and the tax incentives granted. As a summary, seafarers on board vessels registered with the MAR, when employed by a shipping company operating within the MIBC, are deemed eligible employees for the purpose of the employment requirement. Also, those seafarers qualify for exemptions in terms of tax and social security.

The MAR regime establishes certain conditions in respect to the nationality of the crew, whereby at least 30% of the crew must be European citizens (EU or non-EU countries), or from Portuguese-speaking countries, such as Angola, Brazil, Cape Verde, Guinea Bissau, Mozambique, São Tome and Principe, East Timor and Equatorial Guinea.

To cater for the unfortunate but continuous lack of crew in Europe, MAR created an exception to the above rule, based on which a “nationality exemption statement” can be obtained in duly justified cases. The exemption is valid for one year and is renewable on an annual basis, provided the reasons underlying the exemption remain.

The lack of seafarers is a serious problem across Europe. Portugal, with a continuous growing fleet, is committed to playing a role in attracting young people to the shipping industry in order to support the growing demand. The Regional Government of Madeira launched a pilot project named “Maritime Education – Thrive with the Sea” aimed at (i) encouraging the young generation to embrace the maritime industry, (ii) creating awareness of professional opportunities, and (iii) stressing the contribution of seafarers to the global economy. The project also aims to enhance maritime education and training in Portugal.

Maritime Arbitration Centre

The MAR has been working as a catalyst for maritime disputes. The set of (potentially conflicting) legal situations triggered by the registration of a vessel is vast and quite differentiated from a legal point of view.

Maritime dispute resolution in Portugal is mostly referred to the Maritime Court seated in Lisbon – the only court with jurisdiction on maritime trade disputes in Portugal. The increasing number of lawsuits running with the Maritime Court inevitably determine the delivery of a slow justice. The need for an institutionalised maritime arbitration centre in Portugal is, therefore, urgent. Associação Concórdia – a non-profit association established in 2003 by experienced lawyers and other legal experts promoting and managing alternative dispute resolution centres – was aware of this need and, at the end of 2021, launched a project for the creation of an arbitration centre focused on maritime disputes.

After completing all the necessary preparatory work and procedures, the formal request to authorise the creation of the CAM – Centro de Arbitragem Marítima de Lisboa (CAM) was submitted to the Ministry of Justice in September 2022 and it is expected that the CAM will be fully operational in the near future. Besides managing maritime arbitrations, the CAM also aims to instigate legal knowledge within the field of maritime law, by promoting seminars and congresses and publishing periodicals on maritime legal topics.

Maritime arbitration is widely defined as that in which the dispute somehow involves a vessel. Disputes may, therefore, involve myriad situations ranging from the “birth” of the vessel to her “death”. During its lifetime, a vessel is subject to transactions (eg, sale and purchase) and operates under contracts (eg, charter) that enhance, per se, a set of potential disputes.

The advantages linked to arbitration are clear and unquestionable. From a procedural to a speed perspective, arbitration offers a system that clearly better meets the needs of international trade. The level of expertise, the lower costs and the high confidentiality level of specialised arbitration centres are key elements underlying the success of arbitration, as an alternative dispute resolution system. The creation of the CAM is an important achievement for shipping in Portugal and promises to be a strong tool in the context of MAR’s competitiveness.


Portugal has a competitive jurisdiction for shipping-related business. The country developed and consolidated regimes which offer significant tax and operational advantages, without neglecting the certainty and security that all (conscious) investors pursue in their business. The MAR continues to position itself at the centre of shipping industry in Portugal, appealing to various shipping players.

Recent data provided by SDM show that the number of vessels registered in 2022 grew by approximately 8%, to a total of 894 vessels registered as of 31 December 2022, of which 776 are commercial vessels. This performance is the result of the political and legislative measures implemented throughout the years in conjunction with the promotional actions developed by SDM, as the concessionaire of the MIBC and the MAR, with particular emphasis on the strategic partnership entered into with Euromar in December 2014 for the promotion and development of the MAR.

From the Portuguese strategic point of view, it is crucial that national and regional governments co-operate to maintain and improve the current MIBC and MAR regimes in order to meet the ever demanding and sophisticated shipping industry.

CF – Maritime Legal Services

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Rua Dr. António José de Almeida 25

+351 291 102 671
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Law and Practice


Morais Leitão, Galvão Teles, Soares da Silva & Associados is a leading full-service international law firm, with a solid background and great experience. The shipping team provides a full range of legal services and has extensive international experience in advising on complex finance and leasing deals, security structures, ship sales, acquisitions and charter transactions, acting for a diverse range of clients worldwide. The International Ship Register in Madeira (MAR), a white-flag registry, is already established as an efficient and viable alternative to traditional ship registries, thereby attracting a number of international ship-owning groups and banks now looking to register their vessels in Madeira. Morais Leitão is one of the few Portuguese law firms with its own offices in Madeira capable of providing a full service to all those interested in the temporary and permanent flagging-in of vessels, mortgage registrations and the incorporation of ship-owning and management companies in Madeira.

Trends and Development


CF – Maritime Legal Services is a law firm based in Madeira, Portugal that provides high-standard shipping and maritime legal services. CF – Maritime Legal Services is the only law firm in Madeira exclusively dedicated to the provision of legal services related to shipping and maritime law, with a particular focus on matters linked to the Madeira Ship Register and to the Madeira international Business Centre (MIBC). The firm provides legal assistance in the registration of ships, in matters related to ship finance and in the licensing and incorporation of companies within the scope of the MIBC, as well as in other shipping-related services. Aware of the specificities and challenges of the maritime and ship finance industries, CF – Maritime Legal Services provides high-quality, client-oriented services, with the accuracy and knowledge that follows from years of experience.

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